Investors upbeat despite forecast gloom

New Zealand investors are increasingly confident about earning more from their investments this year than they did last year, despite the looming economic slowdown.

And in spite of some predictions that the housing market will slow or even fall, property remains the nation's favourite investment.

The three-monthly ASB Investor Report for the December quarter found that a net 16 per cent of Kiwis expect a better return from their investments this year than in 2005, up from the 13 per cent three months earlier.

The survey - released today - reveals the third consecutive rise in investor confidence after it plunged to a two-year low in June last year.

"Investors seem to be facing 2006 in a similar frame of mind to last year, albeit [they are] a bit more cautious," said ASB chief economist Anthony Byett.

Despite cautious forecasts at the beginning of last year, 2005 turned out to be a good year for New Zealand investors: the economy remained strong, the NZX-50 rose 10 per cent and house prices gained 13.5 per cent.

But most economists do not believe the economy will remain as strong in this year.

Residential property remained the favourite investment, with 24 per cent of people - up 1 percentage point from three months earlier - expecting it to provide the best returns.

Next in popularity were term deposits on 13 per cent, then shares on 10 per cent, then managed funds on 9 per cent.

"With the Reserve Bank's increases to the cash rate last year and subsequent increases across all lending institutions for mortgages, the dominance of residential rental property as the standout preference amongst New Zealand investors may be coming to an end," said Byett.

Confidence up

* Investor confidence has risen for the third quarter in a row.
* Net 16 per cent of people believe their investments will earn more this year than last year.
* Housing remains New Zealanders' favourite investment.